Is Bitcoin Still On Track for $10K Before a 300% Rally?
Current Price Action is Still on Track for Lower Levels
Almost two and a half weeks ago, see here, I took you on a journey using the Elliott Wave Principle (EWP) from the long-term to the short-term to better understand Bitcoin‘s (BTC) price action. I found there should be tremendous opportunities within the next few months to years for three to five-digit gains. I will update my thinking using the short-term (daily) chart in today’s article. See Figure 1 below.
When I wrote my last update, BTC was trading at $16K, and my primary EWP-based expectation was for a W-4 bounce back to ideally $17-18K, followed by the next leg (W-5) lower. On Monday, BTC reached $17049.45. So far, so good. BTC topped right in the grey target zone I had forecasted my premium crypto trading members a week ago.
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Thus, now I can update the “BTC is currently working on the W-3, 4, and 5 sequences” statement to “BTC is currently working on the W-5 sequence.”. A break below the November lows will confirm my primary expectation from my last update that “the ideal downside target for W-v of -5 of -A is between $9566-11315. Hence, I am looking for a low at around $10+/-1K.”
Above $18185 Triggers My Alternate Expectation
However, since financial markets are probabilistic in nature, there’s always a chance one’s primary expectation is wrong, i.e., when the markets break above or below certain price levels determined by the EWP rules.* Thus, one must always have an alternative expectation available. As found last time, “BTC must break above $18185 and then above $21475 to tell us the downside has already been completed in a rather unorthodox fashion.
For now, I find that less likely.” Because BTC has filled in the anticipated path and reached the primary target zone over the past 17 trading days, I still find this option less likely compared to my primary expectations, and that is why it remains my alternative.
* This is no different from placing an actual trade. One has a primary expectation the trade will become profitable. Why else place the trade!? But at the same time, one has a certain price level -the stop loss level- below (or above, in case one is short) the purchase price where one knows the trade is wrong and must be abandoned: the alternative. We also always hope the trade will be profitable, but we know with certainty, not all trades are consistently profitable. Understanding that trading and forecasting the markets using the EWP primary and alternative are the same, one can then use those invalidation levels determined by the EWP as one’s stop loss levels for trading. How simple and elegant.